Mosaic Brands may close as many as 500 stores over the next two years under a “fundamentally changed” bricks-and-mortar landscape in the wake of the COVID-19 pandemic.
Australia’s largest specialty retail group — the owner of the Noni B, Katies, Rivers, Millers, Rockmans, W Lane, Crossroads, Autograph and Beme brands — on Tuesday revealed it may take these drastic steps after unveiling a whopping $170.3 million net loss for the year to June.
It comes as the coronavirus crisis continues to wreak havoc on Mosaic’s operation, with rental negotiations with landlords coming to loggerheads last week after Westfield padlocked 129 of the company’s stores.
Now, with about 87% of Mosaic’s leases expiring within two years, chief executive Scott Evans has told investors mass store closures are on the horizon.
“The retail rental market in Australia is not paused because of the pandemic — it is fundamentally changed for the future,” Evans said in a statement.
“Some though not all landlords accept that reality, so while exact locations and numbers are to be determined, the group anticipates potentially 300-500 store closures over the coming 12-24 months.
“Shuttered stores work for no one so we aim to minimise closures, but not on uncommercial terms,” Evans said.
The pandemic has cleaved a divide in already fractious relations between retailers and landlords in recent months as government-backed negotiation codes fail to bridge differences between some of Australia’s largest shopping centre owners and retail chains.
While bricks-and-mortar retailers have been forced to close some of their store portfolios during the pandemic, businesses have technically been allowed to trade in most jurisdictions since March.
Despite this, some major retailers, notably Premier Investments’ Solomon Lew, have refused to pay rent, while other businesses have signalled an intention to realign their strategies away from bricks-and-mortar and towards e-commerce.
The prospect of mass closures for the Noni B owner would leave a gaping hole in shopping centre tenancy profiles across the country and would likely encourage smaller chains to take a stronger attitude in their own negotiations with landlords.
Mosaic, which voluntarily closed its stores for six weeks during the first wave of coronavirus, has again shuttered its Victorian stores in recent weeks amid the imposition of stage four restrictions.
Those closures, alongside the wider impact of the coronavirus crisis, saw annual revenue fall to $713.5 million, down 17.4% on the financial year ended June 2019.